Legislation cosponsored by Congressman Paul Ryan that would help more Americans access health insurance and make health coverage more affordable for small businesses passed the House of Representatives yesterday by a bipartisan vote of 263-165. The bill – H.R. 525, the Small Business Health Fairness Act of 2005 – would allow small businesses to join together through association health plans (AHPs) to purchase health insurance for their workers, increasing their bargaining power with benefit providers and lowering their costs in the process. It also provides self-employed people the opportunity to access AHPs and use group buying power to rein in health care costs. 

“The rising cost of health insurance premiums is the number one problem facing many of Wisconsin’s small businesses and their workers today,” Ryan said. “Association health plans can help by letting small businesses and self-employed people band together to negotiate better rates and tap into the kind of volume discounts that large companies and trade unions already use to provide a broader selection of health benefits at lower cost. This will enable more businesses to offer health coverage and help uninsured working families get access to quality, affordable health care. AHPs are an important part of the solution to the current health care cost crisis.” 

Estimates indicate that 60 percent or more of the working uninsured work for or depend on small employers who lack the ability to provide health benefits for their workers. 

The U.S. Secretary of Labor released a report in September 2002 showing AHP legislation would make quality health insurance more affordable and accessible for millions of small business owners and their employees. The Labor Department report cites a Congressional Budget Office analysis indicating that small businesses can expect to reap savings averaging nine to 25 percent of the cost of their health insurance premiums. 

Among its specifics, the legislation:

• Establishes that an association health plan (AHP) is a group health plan that offers fully-insured and/or self-insured medical benefits, has been certified by the Labor Department, and is operated by a board of trustees with complete fiscal control and responsibility for all operations. The association sponsoring the plan must have been in existence for at least three years for substantial purposes other than providing health insurance coverage. 
  

• Makes clear that AHPs must comply with the Health Insurance Portability and Accountability Act, which prohibits health plans from excluding high-risk individuals with high claims experience. 
  

• Increases small businesses’ bargaining power with health care providers and gives them access to federally regulated (ERISA) insurance markets that large employers and unions have used successfully for years. Under current law, large employers who offer health benefits to workers in multiple states are not required to follow state benefit mandates, and the coverage these employers offer is exemplary. Under H.R. 525, AHPs that self-insure are exempted from state mandates exactly like large employers and unions who self-insure their benefits.